When Do You Need a Dedicated HR Person? Size and Trigger Guide

The question is not just about headcount. The real question is: what is the cost of the people problems you currently have, and would a dedicated HR person prevent them?

The Headcount Threshold Is a Starting Point

The commonly cited threshold for a first HR hire is 25-35 employees. This is a reasonable starting point because:

• Below 25 employees, a combination of outsourced support and a capable office manager handles most situations
• At 25-35, the volume of hiring, compliance, and employee relations work typically exceeds what can be managed part-time
• Above 35, running without dedicated HR is genuinely risky - the complexity of a workforce that size requires someone whose full attention is on people

But headcount is a blunt measure. A 20-person business with a complex shift workforce, several long-term absence cases, and high turnover may need HR sooner than a 40-person professional services firm where everyone is salaried and turnover is low.

Trigger Signals Beyond Headcount

These are the situations that indicate you need HR now, regardless of your headcount:

You Have Had Your First Tribunal Claim or Serious Disciplinary Case

Employment tribunal claims are a signal that something in your people process has broken down. Even if you win, the time, cost and distraction are significant. A second claim is a pattern.

If you have navigated a disciplinary case, a grievance, or a tribunal claim without HR support, the question to ask is not "did we get through it?" but "were we lucky, or did we get it right?"

Hiring Is a Bottleneck

When business growth is being held back by your inability to hire at the speed you need, that is an operational problem with a people solution. A dedicated HR professional who owns recruitment end-to-end - job briefs, advertising, screening, offers, onboarding - can dramatically reduce time to hire.

Management Quality Is Inconsistent

If you have some managers who handle their teams well and others who are creating problems, that inconsistency will show up in turnover, performance and morale. HR cannot fix bad managers, but a good HR function can coach, support and escalate in ways that a founder juggling ten other priorities cannot.

Turnover Is Higher Than It Should Be

UK average turnover is around 15% per year across all sectors. If yours is above that and you do not have a clear plan to address it, you are losing money. Every person who leaves costs 1-2x their annual salary when you account for recruitment, onboarding and lost productivity.

You Are Growing Rapidly

Rapid growth amplifies every people risk. New starters joining faster than your onboarding process can handle them. Managers promoted beyond their experience. Culture diluting as the team doubles in size. HR cannot solve all of this, but without it, the risks are unmanaged.

You Are in a High-Risk Sector or Workforce Type

Some businesses carry higher people risk regardless of headcount. If you regularly employ workers on zero-hours contracts, have a complex shift workforce, work in a regulated sector (healthcare, financial services, childcare), or deal with sensitive personal data, your HR compliance burden is higher than average.

The Cost of Not Having HR

Most business owners think about the cost of hiring an HR person. Few do the maths on the cost of not having one.

Cost Category	Typical Range
Tribunal claim defence	£5,000-£15,000 (even when you win)
Unfair dismissal award	Median award £7,000; cap £115,115 (2025)
Discrimination claim award	No cap - awards into six figures are not rare
Replacing an employee who leaves	1-2x annual salary
Recruiting one senior hire via agency	15-25% of first-year salary
Management time spent on ad hoc HR issues	Typically 3-5 hours per week across leadership team

A mid-level HR hire costs £35,000-£45,000 per year plus NI and benefits. If that hire prevents one tribunal claim, reduces turnover by 20%, and frees up ten hours per week of leadership time - the return is positive within twelve months.

Making the Business Case

If you are trying to justify the hire internally (to a board, investor, or business partner), structure the argument this way:

Current cost of people issues:

• Estimate your annual turnover cost (number of leavers x average salary x 1.5)
• Add any legal or HR support costs you already pay
• Estimate leadership time spent on people issues (hours x blended rate)

Risk exposure:

• What is your exposure if a tribunal claim landed tomorrow?
• Is your right to work process solid enough to pass a Home Office audit?
• Are your contracts and policies current?

Growth constraint:

• How many roles are open? What is your current time to hire?
• How much growth is being delayed by slow or failed hiring?

The HR hire:

• Salary + NI + benefits (typically £42,000-£55,000 all-in for a competent HR manager outside London)
• Expected reduction in turnover cost
• Expected improvement in time to hire
• Risk reduction value

The numbers usually make the case without needing to over-claim.

Alternatives to a Full-Time HR Hire

If the timing is not right for a permanent hire, there are interim options:

HR retainer services (Citation, WorkNest, Peninsula): Monthly fee typically £150-500 based on headcount. Gives you a helpline, document templates, and employment law advice. Does not own tasks - you still do the work.

Fractional / part-time HR professional: A freelance HR manager on 1-2 days per week, typically £300-500 per day. Better than a retainer because they own work, not just advise on it. Good bridge solution for 15-30 employees.

HR consultant on retainer: An independent HR consultant retained for a set number of hours per month. More expensive per hour but highly experienced - good for complex cases without a permanent commitment.

None of these fully replaces a dedicated hire past 30 employees. But they buy you time to get the hire right rather than rushing it.

This is guidance, not legal advice. For specific employment law queries, consult an employment solicitor or ACAS.